Clifford Chance has advised state-controlled Krung Thai Bank (KTB) on the financing offered by it to Thai AirAsia (TAA) for the purchase of new A320 aircraft, making KTB the first Thai bank to offer aircraft funding.
Under the terms of the agreement, KTB, along with its leasing arm KTB Leasing, will offer a credit line of 3.45 billion baht ($110 million) for TAA to purchase new Airbus 320 jetliners, valued at just over one billion baht apiece, a report in the Bangkok Post said.
The report added that by striking the deal, KTB is treading into an area that has long been dominated by export credit agencies in Europe and the U.S., and could lead to more transactions between locally registered airlines and Thai commercial banks.
Previously, TAA's other aircraft were sourced through operating leases arranged by its Malaysian parent company, AirAsia Bhd.
The Clifford Chance team was lead by Fergus Evans, the firm’s Bangkok managing partner. “This will pave the way for other Thai financial institutions to offer aircraft financing for Thai-based airlines,” said Evans in a statement. “It's a growing market with an increasing demand for aircraft financing as a result of new low-cost airlines being established in the region, in addition to the expansion of existing players."
The Bangkok Post added that TAA chief executive Tassapon Bijleveld plans to add four or five jets a year to grow the airline's fleet to 48 by 2016, and KTB Leasing's asset base is expected to be ramped up to 50 billion baht next year from 30 billion baht this year, enabling it to extend its aircraft financing service.
Ranajit Dam is Southeast Asia Editor at ALB. Follow us on Twitter:@ALB_Magazine.
Other related stories are:
